Telefónica earned 989 million euros by September and confirmed all its financial targets

• Free cash flow generation accelerated its growth, reaching 1,030 million euros in the first nine months of 2024, an increase of 27.7% compared to the same period in the previous year.
• The Group increased its reach to 393 million thanks to the acceleration of commercial activities in its key markets, especially Spain, where it achieved the highest net customer gain in six years.
• Telefónica is making progress in infrastructure deployment, reaching 71% 5G coverage in its four key markets, meeting its goal of exceeding 70% more than two years ahead of schedule.
• The company reiterates its 2024 target: revenue growth of around 1% and EBITDA and EBITDA-Capital Expenditure growth of between 1% and 2%; Up to 13% capital expenditure/revenue ratio; and more than 10% increase in free cash flow.
• The Group also confirmed the dividend payment of EUR 0.30 per share for 2024, to be paid in two tranches of EUR 0.15 each, next December and June 2025.
• “Our GPS action plan is ambitious and continues to deliver results to move in the right direction and consolidate profitable growth. In the first nine months of the year, amid global uncertainty, Telefónica achieved net income of almost one billion euros and reiterated all its financial targets for the full year. We also confirm the remuneration to be paid to our shareholders for 2024,” said Telefónica Chairman José María Álvarez-Pallete.

Madrid, 7 November 2024. Telefónica today presented its results for the first nine months of 2024, marked by the approval of the financial targets set for the year and the achievement of cumulative net income of 989 million euros. In adjusted terms, net income increased by 16.8% in the first nine months to €1,914 million.

These results allow Telefónica to reiterate all its financial targets for 2024. These targets include approximately 1% revenue growth, 1% to 2% EBITDA growth, and 1% to 2% EBITDA-to-Capital Expenditure growth, revenue-driven capital expenditure growth. rate up to 13% and an increase in free cash flow of over 10%. Telefónica also approved the 2024 shareholder remuneration, consisting of a cash dividend of €0.30 per share, payable in two tranches in December 2024 (€0.15) and June 2025 (€0.15).

“Our GPS action plan is ambitious and continues to deliver results to move in the right direction and consolidate profitable growth. In the first nine months of the year, despite the global uncertainty, Telefónica posted net income of almost €1 billion and reiterated all its financial targets for the full year. We also approved the compensation to be paid to our shareholders for 2024. We continue to transform our networks with a strategic perspective on quality and durability, and we do this with higher levels of customer satisfaction. The opportunities ahead are enormous, and Telefónica will continue to use its resources effectively to support growth in service of our shareholders and customers,” said Telefónica Chairman José María Álvarez-Pallete.

Foreign exchange impact

Positive business activity and local currency growth rates in all markets were affected by the development of foreign exchange rates, especially the Brazilian real, in the third quarter results. The currency depreciation had an impact of €429 million on quarterly revenues and €159 million on operating income before depreciation and amortization (EBITDA). Thanks to the hedging strategy implemented by the company, the impact of exchange rate movements on cash flow was limited to 25 million Euros in the first nine months of the year.

Free cash flow increased 4.2 times in this quarter compared to the previous three months, reaching 866 million euros, an increase of 89.5% compared to the third quarter of 2023. Since September, it has reached €1,030 million, an increase of 27.7% compared to the same period last year. -year and therefore above the annual target of 10%.

As a result of exchange rate performance, revenues decreased by 2.9% in the third quarter to 10 billion 23 million euros, reaching a total of 30 billion 418 million euros in the first nine months.

Additionally, 60% of quarterly revenues came from the housing market (B2C); 21% are from the business segment (B2B); the remaining 19% comes from wholesale, affiliates and other revenue.

Due to the exchange rate effect, EBITDA decreased by 2.5% in the quarter to 3 billion 260 million Euros. In the first nine months of the year, operating income before depreciation and amortization increased by 0.4%, reaching 9 billion 684 million euros. At the end of September, capital expenditure stood at €3,642 million (-4.8%), representing 12% of revenues, in line with annual forecasts. Operating cash flow (EBITDA-CapEx) amounted to 1 billion 253 million euros in the third quarter compared to the same period in 2023, reaching 4 billion euros, an increase of 2.2% in the first nine months.

Growth and increased commitment in Spain

On a country basis, Telefónica España’s EBITDA increased by 1% to €1,155 million in the third quarter and by 0.6% to €3,387 million in the first nine months, confirming its return to growth.

This performance occurred against a backdrop of accelerating growth in business activity; Spain had the highest net customer addition in the last six years; Higher customer satisfaction with a Net Promotion Score (NPS) of 34 points, 2 percentage points higher than in June; and greater loyalty, with a churn rate of 0.8%, the lowest in history. Additionally, average revenue per customer (ARPU) remained above 90 euros.

In Germany, EBITDA rose 3% in the quarter to €694 million, and rose 3.9% from January to September to €2,027 million. Customer loyalty in the German market also increased and the churn rate dropped to 1%.

In Brazil, EBITDA fell 5.9% in the quarter to €1,030 million, driven by exchange rates, but increased by 2.2% in the first nine months to €3,066 million. In the UK, VMO2 confirmed its financial targets for the full year, including a commitment to pay dividends to shareholders, and Hispam continued its strategy of reducing capital exposure in the region and continuing to operate more efficiently and at lower costs.

Evolution of major global units

In the context of sustainable growth and business, Telefónica Tech reported revenues of €470 million in the third quarter; A total of 1,453 million Euros in the first nine months of the year; This means an increase of 9.5% compared to the same period of the previous year. Dynamism was reflected in the 40% increase in orders. Continuing to support growth and accelerate digital inclusion through the efficient deployment of next-generation infrastructure, Telefónica Infra finished September with 24 million premises switching to fiber. Submarine cable management company Telxius reported annual traffic growth of 12% in the first nine months and maintained a high profitability rate (48.9%).

Positive competitive positioning

Telefónica finished September with 393 million accesses, up 2%. Fiber and mobile contract customers continued to increase, with cumulative growth of 11% and 3% respectively compared to September 2023. This good business data is supported by the quality and strength of the company’s networks, among other factors. In terms of network deployment, Telefónica maintained its global leadership in fiber; thus, the international footprint of ultrafast networks reached 178 million premises (+4%) in September, of which 81.6 million were FTTH (+13%). This figure includes a total of 24.1 million installations from the Group’s various fiber tools (+19%). Additionally, as of the end of September, 5G technology covered 90 percent of the population in Spain, 97 percent in Germany, 57 percent in Brazil and 68 percent in the United Kingdom. Cumulative distribution in the group’s four main markets reached 71% of the population; This is more than two years ahead of the target of reaching 70% by 2026 set in the GPS strategic plan.

Sustainability

In the third quarter of 2024, Telefónica led a climate maturity assessment implemented through the Telco JAC (CSR Joint Alliance) to address scope 3 (value chain) emissions. This includes specialized training for approximately 1,000 key suppliers. The company has also released its ‘Connected Living’ report, which details how connectivity is helping the company’s customers in Brazil, Germany and Spain avoid 69 million tonnes of CO₂ in 2023.

In the social sphere, Telefónica is making progress in diversity, with 33.6% of female executives making solid progress towards the 37% target by 2027. Additionally, during the quarter Telefónica was named the ‘FT Diversity Leader’ for the fifth consecutive year, scoring 81/100 in the latest EcoVadis assessment, placing the company in 99th place.^he percentile of all companies rated (about 130,000). Finally, in terms of governance, Telefónica has actively participated in the development of the AI ​​Office Code of Practice and joined the EU AU Pact to promote the development of reliable and safe AI. Also last October, Telefónica was awarded first place in the Reporting and Transparency category at the 2024 Reuters Sustainability Awards.